Balance CPAs’ need for protection with clients’ need for clarity.

IN AN EFFORT TO SIDESTEP POTENTIAL
LIABILITY, CPAs may obscure rather
than clarify important information presented to
clients. The types of documents least affected
by professional standards are the ones that are
most important for practice development.

A CPA WHO SPEAKS AND WRITES PLAIN
ENGLISH develops a reputation as a
linguistic “straight shooter.” Clear writing
builds bridges of trust and understanding and
can protect a firm from the kind of confusion
that leads to litigation.

CLIENTS PAY CPAs TO COMMUNICATE CLEARLY
to them so they can make good business
decisions. You can counsel clients effectively
only if you use language they understand.

BOILERPLATE DISCLAIMERS SPELL OUT
a job’s limitations and liabilities.
These boundaries are intended to keep the client
from having unfulfilled expectations. Ask how a
jury would understand the disclaimer. If jurors
might not get it, then reduce and clarify it
further.

PRESENT TECHNICALLY COMPLEX INFORMATION
in a reader-friendly structure. If each
piece of information in the sentence is
indispensable to conveying the full meaning, use
a bulleted list to organize the data.

CLIENTS MAY BE ABLE TO FIND A CHOICE OF
CPA firms to produce comparable data
and analysis, but if yours are easier to
understand they will recognize the value.

Elizabeth
Danziger is the president of WORKTALK, a Los
Angeles–based company offering writing training and
consulting services to financial professionals. She
writes frequently on communication skills. Her
e-mail address is lizd@worktalk.com
.

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The JargonMaster is, of course,
imaginary but, unfortunately, the need to translate CPAspeak
for clients is all too real. Technical doublespeak is a
time-tested defensive measure for all sorts of
professionals, and CPAs are no exception. The problem is
that in trying to sidestep potential liability CPAs may
obscure important client information rather than clarify its
meaning.

In a Word?

“Other than tax compliance claims, a
communications breakdown between CPA and
client is at the heart of a significant
majority of claims…at least 70 percent.”

Source: Ron Klein, JD, CFE, Camico
vice-president of claims.

Even SEC
Chairman Arthur Levitt sees benefits to the profession in
using direct language. In a recent address to the AICPA
council, Levitt said he would like to see CPAs “hone
specific, but plain English definitions for the types of
information [that] should be included in public disclosure.”
You don’t need to allude to every contingency in every
paragraph to play it safe. It truly is possible to

Express yourself in plain English and cover all
the bases.

State the basis for assumptions and the limits
of an engagement and still communicate clearly with clients.

Use the boilerplate language that insurers and
legal counsel recommend—without letting the tone of such
disclaimers overwhelm every sentence.

THE PARADOX OF PLAYING IT SAFE

To build sound client
relationships, a CPA must be both understandable and
circumspect. A reputation for being a linguistic “straight
shooter” can help protect a CPA from the kind of confusion
that leads to litigation. Of course, to guard against
lawsuits, engagement letters should always use the standard
disclaimers recommended by malpractice insurers and state
CPA societies. But clients are less likely to sue someone
they like—and they are inclined to like a professional whom
they can understand without a translator.

Debra
Hunter, CPA and partner of Hunter Hagan & Co., in
Scottsdale, Arizona, points out that obfuscation may make a
CPA feel safe but it’s far from foolproof as a protective
measure. “Language that confuses clients makes them feel we
have something to hide,” Hunter says. “I think some
professionals believe they will seem smarter to the client
if they use confusing language and professional jargon. But
clients are paying us to communicate clearly to them so they
can make good business decisions,” Hunter adds.

Jed
Albert, JD, of Payne, Wood and Littlejohn in Melville, New
York, agrees that practitioners who produce succinct
findings and analysis create more value for their clients.
Albert says that CPAs may intend to be thorough yet may
overlook an important point: “The role of any professional
is to counsel, not to direct. You can counsel clients
effectively only if you use language they understand.”

Boilerplate disclaimers spell out a job’s limitations and
liabilities, but a client may not read the disclaimer
carefully or may not understand exactly what it means. If
the client turns into an angry and determined litigant, he
or she can cost you an enormous amount of time and money,
even if you included the boilerplate text. “You do not have
to be wrong to be sued,” Hunter says.

Robert N.
Pulliam, CPA, of Pulliam Financial Group PLLC, in
Winston-Salem, North Carolina, says, “The most common charge
I see in CPA malpractice claims is ‘I didn’t understand the
boilerplate language in the CPA engagement letter.’ That
concept is often regrettably easy to sell, since few jurors
understand what is written.”

Butch Williams, CPA, of
Dixon Odom PLLC, in Birmingham, Alabama, notes that the
scope of an engagement seems to be a common area for
misunderstanding. “What does the client understand that the
CPA will do for the fees quoted? What does the CPA firm
understand it is required to do? Without effective
communication about the engagement, supported by a concise
understanding in an engagement letter, conflicts can arise,”
Williams says.

Words to the Wise

Problem

Solution

The effect comes before the
cause.

Transpose the cause and
effect.

B
is due to A.

A led to B.

B is caused by A.

A caused B.

B was
the result of A.

A caused B (or
A led to B).

B can be
attributed to A.

A led to B.

Using nouns
instead of verbs.

Use the verb form.

X stated that
payment would not be made.

X stated they would not pay
. (Or X stated that Y would not
pay .)

This
event is a representation of…

This event represents…

The inclusion
of the reserve, [etc.]…

Including the reserve,
[etc.]…

The
issuance of invoices, [etc.]…

Issuing invoices, [etc.]…

Using the passive
voice.

Use
the active voice whenever you reasonably
can.

X
is denoted by Y.

Y
denotes X.

X can be identified by Y.

Y identifies X.

The amounts are
expected to be collected…

The company expects to collect
the amounts…

HAZARDS OF A HAZY LANGUAGE

When accountants dive
for cover, the result can be sentences such as these
examples from CPA correspondence:

“In order for us to approve a construction loan
disbursement, the amount requested by the borrower cannot
exceed the remaining undrawn portion of the loan and the
activity for which the request is to pay must be complete
and verified by a property inspection.”

“If the money cannot be taken out of the trust,
then no debt is presumed to be incurred or continued to
purchase and carry such obligations because there is no
relationship between the debt and tax-exempt obligations.”

Jenny Bolsky, a CPA and audit manager with Miller,
Kaplan, Arase & Co. in North Hollywood, California,
thinks such usage is largely avoidable. “In documents such
as financial statements, we don’t have a lot of leeway,” she
says. “But in proposals, correspondence and management
letters, we have more flexibility.”

Fortunately, the
types of documents that are least affected by professional
standards are those that are most important for practice
development. In other words, you can write a friendly letter
without worrying about adding a disclaimer before yours
truly.

THREE HAZE MAKERS YOU CAN ELIMINATE

Three common
smokescreens in CPAs’ written statements are

Waffle words.

Long, involved sentences.

Convoluted disclaimers.

How effective
are these devices? They are not helpful at all, says Hunter.
“Our clients are not stupid even when they are not familiar
with our terms. We need to write in clear terms the client
understands.” Here are some practical ways to clear up the
haze.

Haze maker 1: Waffle words. These
words (also known as weasel words)—such as seems,
indicates and appears —are used to soften
direct statements.

Larry R. Cook, CPA, in Houston,
says, “Some practitioners may believe that weasel words
afford some protection, as they could have several
interpretations. However, in a legal action murky language
is quickly sniffed out and offers little protection.”

Instead, write what you mean. For example, if there
really are discrepancies, then don’t write there seem to
be discrepancies. Write there are discrepancies.
If the invoices were not signed, then don’t write
it appears that the invoices were not signed.
Write the invoices were not signed.

Waffle Words

Example:
The controller indicated that the primary
reason for this alteration was due to the change
in the subtotal of the nonprime category which
directly affected the concentration calculation.

How did the controller indicate this
fact—through sign language? It doesn’t state how
here. If the controller said something, step right
up and write said or stated .
Here’s a revision: T he controller said the
alteration was caused principally by the change
in the subtotal of the nonprime category.

Haze maker 2: Too many words. Long,
involved sentences leave readers rubbing their foreheads in
pain. Do yourself and your clients a favor by making your
message easy to read. Unlike Charles Dickens, you aren’t
paid by the word, so keep your average sentence length
between 10 and 17 words. Use bullet points if that will make
the information easier to grasp. Imagine that the document
you are writing just drifted into your inbox. Would you
want to read it?

Present technically complex
information in a reader-friendly structure. Pulliam says,
“Our firm demands of all staff that they ‘say it simply.’
Our policy is to have no more than five lines per paragraph,
and to try to place no more than 11 numbers on a page. We
also use bullets and visuals.”

The following
sentence in italics is 46 words long. The existing
defective reserve of 1.65% appears inadequate, and the
analyst recommends that either the actual dollar value of
defective items, as shown on the company’s monthly
breakdown of inventory by location, be excluded from
eligible collateral going forward or that the reserve be
increased to 3.4%.

How do you hack up a
monster like this? First, cut it at the conjunction and.
This at least will give you one 7-word sentence and one
39-word sentence. Then look for ways to shorten the
39-worder. Identify the main subject and verb along with the
key noun–verb combinations of the rest of the sentence and
you will see the core structure of the sentence: The
analyst recommends that either the actual dollar value of
defective items, as shown on the company’s monthly
breakdown of inventory by location, be excluded from
eligible collateral going forward or that the reserve be
increased to 3.4%.

In short, cut long
sentences at conjunctions. Group related information. Reduce
the average length of your sentences. Use the active voice
as much as possible. As Thomas Jefferson said, “The most
valuable of all talents is that of never using two words
when one will do.”

Break It Up

Nonprime at
12/31/96 included $536m to remove an invoice
included in the 12/31 aging that was originally
billed and credited in December ’96 and rebilled
in January ’97, $31m in accounts 90 days past due,
and a $101m concentration reserve for account
debtors in excess of a 25% concentration reserve.

If each piece of information in the sentence
is equally relevant, use a bulleted list to
organize the data in a more readable format. For
example, rewrite the above sentence as

Nonprime at 12/31/96 included:

$536m to remove an invoice from the
12/31 aging that was billed and credited in
December ’96 and rebilled in January ’97.

$31m in accounts 90 days past due.

$101m concentration reserve for
account debtors in excess of a 25% concentration
reserve.

Haze maker 3: Complicated, vague disclaimers.
“Disclaimers themselves are not protections to
the degree that people think,” says Ron Klein,
vice-president of claims for Camico, an insurance company
that works exclusively with CPAs. “The belief that you can
put some boilerplate language into a document and thereby
completely protect yourself can end up doing harm.” One
purpose of a disclaimer is to educate the client about the
extent and type of service that will be rendered.

Klein suggests that practitioners ask themselves if a
jury would understand the disclaimer they’ve written. If
jurors might not get it, then reduce and clarify it.

“Disputes and litigation almost always follow a breakdown
in communication, and CPAs must prevent that from
happening,” says Butch Williams. Ambiguous disclaimers
create fertile ground for misunderstanding.

The
purpose of a disclaimer is to clearly delineate the
boundaries and scope of the engagement, to state what the
practitioner will and won’t do and to list the constraints
and assumptions that may affect the results of the work. The
client may be unclear about any of these factors, and a
disclaimer such as this example in italics is not likely to
help: Although our analyses are based on currently
available information, such analyses are based on
assumptions about future developments in the economy and
the local real estate markets, and on assumptions about
future actions by various parties, including government
agencies, the occurrence of which cannot be assured.

This statement is intended to remind the reader
that projections are based on today’s assumptions, and if
the basis of those assumptions changes in the future, then
the results change. This fact is important to include in the
projection. But what the boilerplate actually says is that
the occurrence of future actions by various parties cannot
be assured. In fact, barring a catastrophe, some future
action by various parties can be assured. Thus, the
statement does not accurately express the meaning intended.

Rather than rely exclusively on a written disclaimer,
meet with the client and tell him or her what’s involved in
the engagement. Then follow up with a letter that clearly
states the boundaries of your commitment along with the
inherent limits of your knowledge, assumptions and
projections.

PLAIN ENGLISH HELPS BUILD RELATIONSHIPS

Marketing your firm as a
“plain English” accounting practice tells prospective
clients that you care about their time and you take
responsibility. “Listening to clients’ needs and clearly
documenting what we are going to do, when we are going to do
it, how much we will charge and when we expect to get paid
all add up to stronger client relationships,” Williams says.
“We prefer to address any concerns prior to the engagement
rather than have conflicts arise after its completion.” A
vital way to build strong relationships is through frequent,
clear communication, both spoken and written.

In
today’s highly competitive economy, it’s hard to maintain a
significant market advantage based on technical skills
alone. For many businesses, the most powerful value-added
service is communication. Clients may be able to choose
among CPA firms to produce comparable data and analysis, but
if yours are easier to understand they will recognize the
value.